Capital gain over time on houses will often outstrip units. This is mainly due to a concept known as "scarcity". Buying a home means you're also buying the land that the home is built on. Typically land increases in value over time as it's limited, therefore scare and in higher demand as the population grows. Units on the other hand can be built in large volumes on relatively small blocks of land. This makes units less scare as more units can be built to keep up with demand. 
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​An investment house however generally does come with more maintenance cost whilst a unit often comes with additional body corporate fees and strata levies. 

Of course, you’ve heard this before. But location can mean different things when it comes to rental properties. Renters are often looking for maximum convenience so consider properties near schools, major shopping centres and public transport. Also, these properties will generally produce a better long term capital gain.

​Spend plenty of time researching target areas, including recent property price movements and future predictions, rental vacancy rates and any proposed infrastructure improvements. It's always a good idea to visit a number of properties on the market and do some comparisons before making a decision.

One of the worst mistakes you can make with any investment is to buy with your heart instead of your head. Remember, your rental property is not your ‘home sweet home’.

A well-presented property is desirable, but think sensible, not swank.

Ideally, you want a neutral interior colour scheme, serviceable and resilient flooring and window coverings, a low-maintenance yard and good storage. And if buying an older style unit, look for one with an internal laundry, a garage or car space and few stairs (unless there’s a great view to be had higher up, which can add to the property value).

An investment property requires regular financial commitment beyond the loan repayments. Make sure you have the capacity to cover land and water rates and any maintenance and repair costs. Tenants are entitled to repairs or replacements as quickly as possible under their rental agreement, so you will need to have the capacity to undertake maintenance. 

Apartments or units also come with body corporate fees, which can run to thousands in some modern complexes with professional landscaping and shared amenities, such as swimming pools.

Make sure you take out landlord protection insurance. This will cover you for damage caused by a tenant and unpaid rent if a tenant skips out, in addition to other standard risks, such as a house fire or storm.

If you invest in a strata title property, make sure the body corporate has sufficient building insurance to cover the cost of rebuilding the complex in today’s prices. It’s often hard to work out what you need to cover versus what the body corporate covers. A good rule of thumb is everything from the wall paint inward is yours and everything outside of that is covered by the body corporate.

Many property investors take advantage of interest-only loans because interest payments are a lower ongoing commitment than principal and interest repayment. You are however taking a punt that the property’s value will increase over time, leaving you with a capital gain in the long run.

A principal and interest loan will require you to sustain higher regular payments however your will be paying down your loan over the longer term and will likely receive a lower interest rate.

Managing a property takes time and energy. We advise getting a professional property manager to advertise your rental, screen and select tenants, collect the rent, co-ordinate repairs and maintenance, provide condition reports and manage any disputes. Ask other local landlords for referrals for reputable managers.

If you decide to self-manage, you will need to be well-versed on tenancy laws and prepared to organise repairs, including those that arise after hours.

The ATO will give you a discount off your tax bill for wear and tear on property. It’s known as depreciation, and can be a very handy windfall for investors, especially if you buy a new property.

The formula is quite complex and depends on the age of your property, building materials and the various fittings. That’s where a professional quantity surveyor comes in. For a fee (often around $1000), they’ll assess the property and complete a Tax Depreciation Schedule, which your accountant will incorporate in your tax return.